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Boom far from over

By Staff Reporter

A new forecast by a leading real estate expert has predicted the housing market will continue its strong momentum well into 2015.

According to the analysis by Louis Christopher from SQM Research, prices still have room to move over the coming 12 months.

In a scenario where rates remain unchanged, the economy stays steady and the Australian dollar remains above 85 US cents, Mr Christopher predicts the weighted average growth of all cities will be five to nine per cent.

In this scenario, Sydney would continue to record outstanding growth of eight to 12 per cent.

Melbourne and Brisbane would be the next strongest performers – Melbourne would record growth of five to nine per cent while Brisbane is tipped for five to eight per cent growth.

Adelaide is also tipped for a pick up, with growth of four to seven per cent, while Hobart could experience growth of three to six per cent.

PerthPerth, TAS Perth, WA, Canberra and Darwin are expected to be the worst performers in this scenario, with Darwin’s growth ranging from -3 per cent to one per cent.

If rates were to fall in the first quarter of 2015, the weighted average may creep up to around seven to 12 per cent.

However, if rates were to rise in mid- to late-2015, national growth may be a more subdued three to six per cent.

In its September meeting minutes, the Reserve Bank signalled its intention to keep rates at 2.5 per cent “for the next year at least”.

Mr Christopher said while prices were elevated, fears of a pricing bubble were unfounded.

“The market is somewhat overvalued but not by as much as what some have very publicly stated. I don’t believe at this stage the market is in a bubble,” he said.

“Some cities are heading into overvalued territory, but the point overall is the market is far from a bubble situation when taking into account historical valuations over the past 30 years.”

The full results are reproduced below:

City/Region

12 months to June 2014

Source: ABS Cat 6416

2014 Forecast Taken From Sept 13 H&B report

2015F
Scenario 1 (base case)

Rates remain unchanged. Economy steady AUD above 85 cents

2015
Scenario 2

A 0.25 cut
in rates in
1st qtr. 2015.

2015F
Scenario 3

A 0.25 rise mid

to late 2015

2015F
Scenario 4

Macro prudential tools employed beginning of year. Rates cut end of year.

Perth

+3.6%

+4% to +8%

+1% to +4%

+2% to +5%

+1% to +4%

-2% to +2%

Brisbane

+6.8%

+4% to +7%

+5% to +8%

+7% to +11%

+5% to +7%

+3% to +6%

Darwin

+3.4%

+3% to +6%

-3% to +1%

-1% to +3%

-2% to +1%

-4% to +1%

Melbourne

+9.3%

+4% to +7%

+5% to +9%

+7% to +13%

+4% to +7%

+2% to +6%

Sydney

+15.6%

+15% to 20%

+8% to +12%

+11% to +15%

+4% to +7%

+3% to +7%

Adelaide

+5.6%

+3% to +6%

+4% to +7%

+5% to +8%

+3% to +6%

+1% to +4%

Hobart

+4.3%

+1% to +3%

+3% to +6%

+5% to +8%

+3% to +6%

+1% to +3%

Canberra

2.2%

-1% to -4%

-2% to +3%

+1% to +4%

-1% to 3%

-2% to +3%

Capital city Average (weighted)

+10.1%

+7% to +11%

+5% to +9%

+7% to +12%

+3% to +6%

+2 to +5%

Source: SQM Research

Boom far from over
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